Penn West has a leading position in several emerging and established
light-oil resource plays as well as numerous other large scale resource
opportunities. Control of this quality asset base affords Penn West the
ability to allocate capital to achieve a range of strategic goals. In
the past several years, Penn West has balanced appraisal of its
significant resource base with a meaningful dividend. In 2013, Penn
West plans to remain committed to the dividend model and to improving
capital efficiencies and production reliability. Over the long-term,
Penn West remains focused on realizing the significant value inherent
in our extensive light oil resource base. Consistent with this plan,
the Board has approved a 2013 Base Capital Budget of $900 million with
the possibility of an additional $300 million based on certain
conditions, as described below.

Capital Budget

Penn West commenced lease preparation and drilling related activity
through the latter half of the fourth quarter, with ten rigs operating
by mid-December 2012, establishing momentum for the 2013 capital
program.

The focus of the 2013 capital budget is to improve capital efficiencies
by focusing capital on those projects that, on average, are expected to
produce flowing barrel efficiencies in the $35,000 to $40,000 per boe
per day range while also attaining a minimum 20 percent internal rate
of return target. We adopted a more balanced pace of drilling, with the
2013 program peaking at approximately 20 rigs in the first quarter,
versus 38 rigs in the first quarter of 2012. This strategy is expected
to result in a more optimal level of activity from a capital efficiency
perspective. Facilities expansion projects completed in 2011 and 2012
are expected to accommodate production volume additions in our key
project areas in 2013.

The 2013 Base Capital Budget is $900 million and includes an option to
layer in up to $300 million of incremental capital weighted in the
second half of the year. This incremental capital is subject to
commodity price and crude oil differential realizations, demonstrating
expected capital efficiencies and ongoing strategic portfolio
management. Penn West will announce in advance, if we plan to spend
beyond the Base Capital Budget of $900 million.

Production Forecast

The 2013 Base Capital Budget will be directed predominantly toward light
oil projects within Penn West's resource assets portfolio. The
weighting is expected to increase the corporate oil and liquids split
of current production volumes of approximately 62 percent, post the
divestments that closed in December 2012, to a range of approximately
65 to 68 percent at year end 2013 dependent upon capital spending
levels. As in prior years, base natural gas production will be allowed
to decline while the focus of the capital program will be to grow oil
production. This is a pattern that Penn West has demonstrated
consistently over the past several years. We are committed to
continuing improvements in netback realizations through our capital
rotation from natural gas weighted base assets to our light oil
weighted core resource assets. Natural gas opportunities remain in
inventory until we can see a sustained increase in product prices and
therefore rates of return.

After accounting for the divestment of approximately 13,000 boe per day,
production declines associated with limited operational activity in the
second half of 2012 and lower peak drilling activity planned for the
first quarter of 2013, the Company forecasts 2013 average annual
production to be in the range of 135,000 to 145,000 boe per day. The
2013 Base Capital Budget is expected to maintain average production
volumes approximately flat to modestly lower relative to year-end 2012
levels.

One of our overall aims for 2013 is to enhance production reliability of
our base assets. Planned activities under the 2013 Base Capital Budget
are focused on optimizing field operations through tighter planning and
execution in facility turnarounds, and improved field recovery
processes with particular attention to well, pipeline and small
facilities repairs. Penn West has several major turnaround programs
planned in June and July of 2013 that are expected to bring
approximately 10,000 boe per day of production off-line and impact
production volumes in the second and third quarters of 2013.

Allocation of 2013 Base Capital

The 2013 Base Capital Budget is planned to be allocated 90 percent
toward light oil projects. Capital investment will be focused on fewer
areas and where facilities are in place with the intention of driving
better capital efficiencies. Planned facilities and well equipping
capital spending has been significantly reduced in 2013 relative to
2012 due to the completion of various facilities expansion projects in
2011 and 2012. Over the past several years, Penn West has allocated
capital to appraisal and validation of our light oil resources,
exploration and complementary land acquisitions. Given our significant
inventory of over 7,000 light oil and liquids locations, allocation to
these activities has been limited under the 2013 Base Capital Budget.

Forecast Capital Allocation Summary
(Percent of Capital)

2012*

2013*

Drilling and Completions

61

74

Facilities and Well Equipping

35

23

Land and Exploration

3

1

Corporate

1

2

* estimated

Forecast Capital Allocation By Play

Percent of Base Capital Budget

Spearfish

30

Slave Point

14

Cardium

13

North/Peace River Arch

11

Central

11

Viking

7

Non-Op/Other

9

JV's

4

Exploration

1

Divestitures Update

On December 19, 2012, Penn West announced the successful completion of
several divestments for total proceeds of approximately $1.35 billion.
Total production associated with the combined divestments was
approximately 13,000 boe per day. Divested assets were predominantly
located outside the Company's core operating areas, represented
inventory that was in the bottom tier from a capital efficiency and
rate of return perspective, and did not fit with our ongoing strategy.

Financial Management

The proceeds of approximately $1.35 billion from recently completed
divestments have been applied against Penn West's credit facility
providing improved financial flexibility and put Penn West in a
stronger financial position. Current indebtedness outstanding on the
facility is approximately $800 million with remaining capacity of
approximately $2.2 billion. Balance sheet strength is further enhanced
by our significant hedging portfolio in both crude oil and natural gas
for 2013, which provides for greater certainty of cash flows to support
our capital and the dividend programs. Acquisition and divestitures
will continue to be an integrated element of Penn West's ongoing
strategy supporting the continued financial management focus on debt
reduction.

Penn West currently has commodity hedge contracts in place on 55,000
barrels per day of crude oil, representing over 80 percent of forecast
2013 crude oil volumes net of royalties, using collars with an average
floor price of US $91.55 per barrel and ceiling of US$104.42 per
barrel. On the natural gas side, Penn West has commodity hedge
contracts in place on 125,000 mcf per day, representing over 45 percent
of forecast 2013 natural gas volumes net of royalties, at an average
price of C$3.34 per mcf.

Organizational Update

Penn West is pleased to announce several appointments within the
Company.

Mr. Dave Middleton has assumed the role of Executive Vice President,
Operations Engineering. In this role Dave will have responsibility for
the direction of all operations activities including: surface land,
drilling, completions, facilities and supply chain management. Dave has
served in this capacity on an interim basis since November 2012. Dave
has over 32 years of industry experience and has been with Penn West
for over 13 years, holding a variety of leadership positions. His
knowledge and experience have helped to focus key planning and
execution functions in this department. In addition, Dave will carry on
in his capacity as Managing Director for the Peace River Oil
Partnership.

Mr. Mark Fitzgerald, Senior Vice President, Development, has assumed the
additional responsibility of managing the Acquisition and Divestitures
("A&D") function. Mark has broad managerial experience and has served
in A&D roles in prior employment. Aligning the A&D function with
Development facilitates an even greater integration between Penn West's
resource development portfolio and optimal acquisition and divestment
strategy.

Mr. Tony Horvat has been promoted to the position of General Manager,
Corporate Planning. Tony's strong engineering background and prior
experience in Penn West's reserves and resources planning function make
him an outstanding addition to our leadership group.

Mr. Laurence Broos has been promoted to the position of Treasurer,
reporting directly to the Chief Financial Officer, and assumes
additional financial responsibilities. Laurence has an extensive
history within Penn West's finance team and a solid background in
corporate finance.

The evaluation of potential candidates for the role of Chief Operating
Officer is proceeding as expected. In the interim, Mr. Murray Nunns,
President and Chief Executive Officer, continues to carry out the
duties of Chief Operating Officer.

Conference Call Details

A conference call will be held to discuss Penn West's 2013 Budget at
9:00am Mountain Time (11:00am Eastern Time) on Thursday, January 10,
2013.

A digital recording will be available for replay two hours after the
call's completion, and will remain available until January 23, 201321:59 Mountain Time (23:59 Eastern Time). To listen to the replay,
please dial 416-849-0833 or 1-855-859-2056 (North America toll-free)
and enter Conference ID 86592502, followed by the pound (#) key.

Disclaimer

Certain information in this press release is included to provide
investors with information about our expectations as at January 9, 2013
for production and capital expenditures for 2013 and readers are
cautioned that the information may not be appropriate for any other
purpose. This information constitutes forward-looking information.
Readers should note the assumptions, risks and discussion under
"Forward-Looking Statements" and are cautioned that numerous factors
could potentially impact our capital expenditure levels and production
performance for 2013, including any future acquisition and divestiture
activity.

Oil and Gas Information Advisory

Barrels of oil equivalent ("boe") may be misleading, particularly if
used in isolation. A boe conversion ratio of six thousand cubic feet of
natural gas to one barrel of crude oil is based on an energy
equivalency conversion method primarily applicable at the burner tip
and does not represent a value equivalency at the wellhead. Given that
the value ratio based on the current price of crude oil as compared to
natural gas is significantly different from the energy equivalency
conversion ratio of 6:1, utilizing a conversion on a 6:1 basis is
misleading as an indication of value.

Forward-Looking Statements

This news release is primarily comprised of statements as to Penn West's
internal projections or beliefs relating to future events or future
performance, including without limitation, Penn West's capital budget
and production forecast for 2013, which constitute forward-looking
statements or information (collectively, "forward looking statements")
within the meaning of the "safe harbour" provisions of applicable
securities legislation. Forward-looking statements are typically
identified by words such as "anticipate", "continue", "estimate",
"expect", "forecast", "may", "will", "project", "could", "plan",
"intend", "should", "believe", "outlook", "objective", "aim",
"potential", "target" and similar words suggesting future events or
future performance. In addition, statements relating to "reserves" or
"resources" are deemed to be forward-looking statements as they involve
the implied assessment, based on certain estimates and assumptions,
that the reserves and resources described exist in the quantities
predicted or estimated and can be profitably produced in the future.

In particular, this document contains forward-looking statements
pertaining to, without limitation, the following: our belief that we
have a leading position in four of Canada's five largest light-oil
producing regions as well as numerous other large scale resource
opportunities and our belief that this position affords Penn West the
ability to allocate capital to achieve a range of strategic goals; our
plan to remain committed to the dividend model and to improving capital
efficiencies and production reliability in 2013; our expectation to
remain focused on realizing the significant value inherent in our
extensive light oil resource base; our planned 2013 Base Capital Budget
of $900 million; the possibility of $300 million in additional capital
spending depending on conditions including commodity price and crude
oil differential realizations, demonstrating expected capital
efficiencies and ongoing strategic portfolio management; our forecast
for 2013 average production to be in the range of 135,000 to 145,000
boe per day; our belief that the reduction in the amount outstanding
under Penn West's credit facility will provide improved financial
flexibility; the focus of our 2013 capital plan on improving capital
efficiencies by focusing capital on those projects that, on average,
are expected to produce flowing barrel efficiencies in the $35,000 to
$40,000 per boe per day range while also attaining a minimum 20 percent
internal rate of return; our plans for our 2013 drilling program to
peak at approximately 20 drilling rigs in the first quarter of 2013;
our expectation that our 2013 drilling program will result in a more
optimal level of activity from a capital efficiency perspective; our
expectation that facilities expansion projects completed in 2011 and
2012 should accommodate production volume additions in 2013; our plan
for 2013 capital spending to be directed predominantly toward light oil
projects; our expectation for corporate oil and liquids weighting of
production volumes to increase from approximately 62 percent of
production in 2012 after the effect of the divestments that closed in
December 2012 to a range of approximately 65 to 68 percent of
production at the end of 2013; our plan to remain committed to
continuing improvements in corporate realizations through our capital
rotation from natural gas weighted base assets to our light oil
weighted core resource assets; our expectation for spending under the
2013 Base Capital Budget to maintain average production volumes
approximately flat to modestly lower relative to year-end 2012 levels;
our planned activities under the 2013 Base Capital Budget and expected
focus on optimizing field operations through tighter planning and
execution in facility turnarounds, and improved field recovery
processes with particular attention to well, pipeline and small
facilities repairs; our plans for major turnaround programs in June and
July 2013, associated volumes of production expected to be brought
off-line and expected impact on production volumes in 2013; all details
relating to our planned allocation of the 2013 Base Capital Budget,
including amounts anticipated to be spent by capital spending category
and by play; our belief that our balance sheet strength is enhanced by
our hedging portfolio in both crude oil and natural gas for 2013; our
belief that our hedging portfolio provides greater certainty of cash
flows to support our capital and dividend programs; and our expectation
that acquisitions and divestitures will remain an important element of
Penn West's 2013 and ongoing strategy.

With respect to forward-looking statements contained in this document,
we have made assumptions regarding, among other things: future crude
oil, natural gas liquids and natural gas prices and differentials
between light, medium and heavy oil prices and Canadian, WTI and world
oil prices; future capital expenditure levels; future crude oil,
natural gas liquids and natural gas production levels; drilling
results; future exchange rates and interest rates; the amount of future
cash dividends that we intend to pay and the level of participation in
our dividend reinvestment plan; our ability to obtain equipment in a
timely manner to carry out development activities and the costs
thereof; our ability to market our oil and natural gas successfully to
current and new customers; the impact of increasing competition; our
ability to obtain financing on acceptable terms; our ability to access
the remaining capacity on our credit facility; and our ability to add
production and reserves through our development and exploitation
activities. In addition, many of the forward-looking statements
contained in this document are located proximate to assumptions that
are specific to those forward-looking statements, and such assumptions
should be taken into account when reading such forward-looking
statements. In particular, it should be noted that our current
guidance for our forecast average production levels and the planned
allocation of capital spending for 2013 assume the 2013 Base Capital
Budget of $900 million and do not reflect the possible additional $300
million in capital spending that might be implemented if determined
appropriate - any such additional capital spending could have a
material impact on our guidance.

Although we believe that the expectations reflected in the
forward-looking statements contained in this document, and the
assumptions on which such forward-looking statements are made, are
reasonable, there can be no assurance that such expectations will prove
to be correct. Readers are cautioned not to place undue reliance on
forward-looking statements included in this document, as there can be
no assurance that the plans, intentions or expectations upon which the
forward-looking statements are based will occur. By their nature,
forward-looking statements involve numerous assumptions, known and
unknown risks and uncertainties that contribute to the possibility that
the predictions, forecasts, projections and other forward-looking
statements will not occur, which may cause our actual performance and
financial results in future periods to differ materially from any
estimates or projections of future performance or results expressed or
implied by such forward-looking statements. These risks and
uncertainties include, among other things: the possibility that our
2013 capital expenditure levels and / or production levels will be
materially lower or higher than currently forecast and that our
operational and financial performance and the market value of our
securities is adversely affected thereby; the impact of weather
conditions on seasonal demand and ability to execute capital programs;
risks inherent in oil and natural gas operations; uncertainties
associated with estimating reserves and resources; competition for,
among other things, capital, acquisitions of reserves, resources,
undeveloped lands and skilled personnel; incorrect assessments of the
value of acquisitions; geological, technical, drilling and processing
problems; general economic conditions in Canada, the U.S. and globally;
industry conditions, including fluctuations in the prices of oil and
natural gas; royalties payable in respect of our oil and natural gas
production and changes thereto; changes in government regulation of the
oil and natural gas industry, including environmental regulation;
fluctuations in foreign exchange or interest rates; unanticipated
operating events or environmental events that can reduce production or
cause production to be shut-in or delayed, including wild fires and
flooding; failure to obtain industry partner and other third-party
consents and approvals when required; stock market volatility and
market valuations; OPEC's ability to control production and balance
global supply and demand of crude oil at desired price levels;
political uncertainty, including the risks of hostilities, in the
petroleum producing regions of the world; the need to obtain required
approvals from regulatory authorities from time to time; failure to
realize the anticipated benefits of dispositions, acquisitions, joint
ventures and partnerships; changes in tax and other laws that affect us
and our securityholders; changes in government royalty frameworks; the
potential failure of counterparties to honour their contractual
obligations; and the other factors described in our public filings
(including our most recent Annual Information Form) available in Canada
at www.sedar.com and in the United States at www.sec.gov. Readers are
cautioned that this list of risk factors should not be construed as
exhaustive.

The forward-looking statements contained in this document speak only as
of the date of this document. Except as expressly required by
applicable securities laws, we do not undertake any obligation to
publicly update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise. The
forward-looking statements contained in this document are expressly
qualified by this cautionary statement.

Penn West shares are listed on the Toronto Stock Exchange under the
symbol PWT and on the New York Stock Exchange under the symbol PWE.